Heirs of Enrique Tan, Sr. v Pollescas, G.R. No.

145568, November 17, 2005

FIRST DIVISION

HEIRS OF ENRIQUE TAN, SR., G.R. No. 145568

namely, NORMA TAN,
JEANETTE TAN, Present:
JULIETA TAN, Davide, Jr., C.J.,
ROMMEL TAN, and Chairman,
ENRIQUE TAN, JR., Quisumbing,
All represented by Ynares-Santiago,
ROMMEL TAN, Carpio, and
Petitioners, Azcuna, JJ.

- versus Promulgated:
REYNALDA POLLESCAS,
Respondent. November 17, 2005

x-----------------------------------------------------------------------------------------x

DECISION

CARPIO, J.:

The Case

Before the Court is a petition for review

[1]

of the Decision

[2]

of the Court of Appeals promulgated on 31

August 2000 in CA-G.R. SP No. 48823. The Court of Appeals affirmed the decision of the Department of
Agrarian Reform Adjudication Board ordering petitioners to respect respondents possession and
cultivation of the land.

The Antecedents

Petitioners Norma Tan, Jeanette Tan, Julieta Tan, Rommel

[3]

Tan and Enrique Tan, Jr. (Tan

Heirs) are co-owners of a coconut farmland (Land) located at Labo, Ozamis City with an area of 25,780
square meters.

[4]

Esteban Pollescas (Esteban) was the original tenant of the Land. Upon Estebans death in 1991,
his son Enrique Pollescas (Enrique) succeeded him and was appointed as tenant by the landowner
Enrique Tan (Tan).

[5]

However, respondent ReynaldaPollescas (Reynalda), Estebans surviving second spouse,

demanded that Tan recognize her as Estebans successor. Tan did not accede. Thus, Reynalda filed with
the Department of Agrarian Reform Adjudication Board of Ozamis City (DARAB-Ozamis) a complaint for
Annulment of Compromise Agreement, Quieting of Tenancy Relationship and damages.

[6]

In its Decision dated 28 April 1993, the DARAB-Ozamis declared Reynalda as the lawful tenant of
the Land. The DARAB-Ozamis apportioned the harvests between the Tan Heirs and Reynalda based on
the customary sharing system which is 2/3 to the landowner and 1/3 to the tenant.

[7]

On the following harvest dates, 11 and 19 of June, 9 September, 6 and 13 of December 1993,
Reynalda failed to deliver to the Tan Heirs 2/3 of the harvests amounting toP3,656.70. The Tan Heirs
demanded Reynalda to pay such amount.

[8]

However, Reynalda ignored the demand.

Consequently, the Tan Heirs filed a complaint for estafa against Reynalda with the Municipal Trial
Court in Cities, Ozamis City, Branch 2.

[9]

The trial court found Reynalda guilty of estafa

[10]

and sentenced

her to five months of arresto mayor maximum to two years of prisioncorreccional minimum and ordered
her to pay the Tan HeirsP3,656.70, the amount which she misappropriated.

[11]

Subsequently, for Reynaldas continued failure to deliver their share, the Tan Heirs filed with the
DARAB, Misamis Occidental (DARAB-Misamis Occidental) an ejectment case.

On 18 September 1996, the DARAB-Misamis Occidental

[13]

[12]

ruled in favor of the Tan Heirs. The

DARAB-Misamis Occidental disposed of the case in this wise:

WHEREFORE, premises considered, decision is hereby rendered terminating

the tenancy relationship of herein parties.

Consequently, respondent ReynaldaPollescas is ordered to vacate the subject

landholding and turn-over its possession and cultivation to the plaintiffs.

The MARO of Ozamis City is likewise ordered to investigate and verify in the
subject landholding if there are actual farmer-cultivators in the area who may qualify as
lessees thereof, who then should be placed under leasehold pursuant to the mandate of
Section 12, R.A. 6657.

SO ORDERED.

[14]

Aggrieved by the decision, Reynalda appealed to the DARAB, Diliman, Quezon City (DARAB).
The DARAB reversed the decision of the DARAB-Misamis Occidental, to wit:

WHEREFORE, premises considered, the appealed decision dated 18 September

1996 is hereby REVERSED and SET ASIDE and a new one is rendered ordering the
landowners to respect the peaceful possession and cultivation of the subject landholding.

Respondent-Appellant is hereby ordered to pay her unpaid leasehold rentals.

SO ORDERED.

[15]

The Tan Heirs appealed the decision of the DARAB to the Court of Appeals. The Court of
Appeals affirmed the decision of the DARAB ordering the Tan Heirs to respect Reynaldas possession and
cultivation of the Land.

Hence, this petition.

The Ruling of the Court of Appeals

In affirming the decision of the DARAB, the Court of Appeals cited Roxas y Cia v. Cabatuando, et
al.

[16]

where this Court held that x xx mere failure of a tenant to pay the landholders share does not

necessarily give the latter the right to eject the former when there is lack of deliberate intent on the part of
the tenant to pay x xx.

The Court of Appeals held that Reynaldas failure to deliver the full amount of the Tan Heirs share could
not be considered as a willful and deliberate intent to deprive the Tan Heirs of their share. The Court of
Appeals held that Reynalda honestly believed that she was entitled to a share of the harvests in 19921993 while the case for Annulment of Compromise Agreement was pending before the DARAB-Ozamis.

Reynalda also believed that she could effect a set-off for her 1992-1993 share from the 1994 share of the
Tan Heirs.

The Court of Appeals further declared that the rental must be legal to consider non-payment of such as a
ground for ejectment. The appellate court stated that:

x xx for a tenants failure to pay rental to come within the intendment of the law as
a ground for ejectment, it is imperative that the rental must be legal. What the law
contemplates is the deliberate failure of the tenant to pay the legal rental, not the failure
to pay an illegal rental. A stipulation in a leasehold contract requiring a lessee to pay an
amount in excess of the amount allowed by law is considered contrary to law, morals or
public policy. Such contract is null and void as to the excess.

It is noteworthy that Section 34 of RA 3844 provides that the consideration for the lease
of riceland and lands devoted to other crops shall not be more than the equivalent of
twenty-five per centum of the average normal harvest. The tenant is obliged to pay a
maximum of 25% of the normal harvest and not two thirds as in the case at bar. Thus,
even admitting that a set-off was effected in favor of respondent for her 1992-1993 share,
[17]
yet enough is left to cover the 25% share of the petitioners for the 1994 crop.

Citing Section 8 of Republic Act No. 3844 (RA 3844), the Court of Appeals also held [t]here is nothing in
the

law

that

agreement.

[18]

makes

failure

to

deliver

share

ground

for

extinguishment

of

leasehold

Reynaldas failure to deliver fully the share of the Tan Heirs is not sufficient to disturb the

agricultural leasehold relation.

[19]

The Issues

In their Memorandum, the Tan Heirs raise the following issues:

I
WHETHER THERE IS NO EXCEPTION TO THE GROUNDS FOR EXTINGUISHMENT
OF LEASEHOLD RELATION UNDER SECTION 8 OF RA 3844.

II
WHETHER THE COURT OF APPEALS CORRECTLY RULED THAT REYNALDA IS
OBLIGED TO PAY ONLY 1/4 OR 25% OF THE NORMAL HARVEST AND NOT 2/3
WHEN THE SUBJECT LAND WAS NOT YET PLACED UNDER THE LEASEHOLD
[20]
SYSTEM PURSUANT TO SECTION 12 OF RA 6657.

The Ruling of the Court

The petition lacks merit.

At the outset, the Court declares that RA 6657 is the governing statute in this case.

On 8 August 1963, RA 3844 or the Agricultural Land Reform Code

share tenancy and put in its stead the agricultural leasehold system.

[22]

[21]

abolished and outlawed

On 10 September 1971, Republic

Act No. 6389 (RA 6389) amending RA 3844 (RA 3844 as amended) declared share tenancy relationships
as contrary to public policy.

[23]

RA 6389 did not entirely repeal Republic Act No. 1199

even if RA 6389 substantially modified them.

[25]

[24]

and RA 3844

Subsequently, Republic Act No. 6657 or the

Comprehensive Agrarian Reform Law of 1988 (RA 6657) took effect on 15 June 1988. RA 6657 only
expressly repealed Section 35 of RA 3844 as amended.

[26]

Thus, RA 6657 is the prevailing law in this

case. The harvests in dispute are for the years 1992-1993 or after the effectivity of RA 6657.

No ground for dispossession of landholding

Section 7 of RA 3844 as amended provides that once there is a leasehold relationship, as in the
present case, the landowner cannot eject the agricultural tenant from the land unless authorized by the
court for causes provided by law.

[27]

RA 3844 as amended expressly recognizes and protects an

agricultural leasehold tenants right to security of tenure.

[28]

Section 36 of RA 3844 as amended enumerates the grounds for dispossession of the tenants
landholding, to wit:
SEC. 36. Possession of Landholding; Exceptions.Notwithstanding any
agreement as to the period or future surrender of the land, an agricultural lessee shall
continue in the enjoyment and possession of his landholding except when his
dispossession has been authorized by the Court in a judgment that is final and executory
if after due hearing it is shown that:
(1) The landholding is declared by the department head upon recommendation of
the National Planning Commission to be suited for residential, commercial, industrial or
some other urban purposes: Provided, That the agricultural lessee shall be entitled to
disturbance compensation equivalent to five times the average of the gross harvests on
his landholding during the last five preceding calendar years;
(2) The agricultural lessee failed to substantially comply with any of the terms
and conditions of the contract or any of the provisions of this Code unless his failure is
caused by fortuitous event or force majeure;
(3) The agricultural lessee planted crops or used the landholding for a purpose
other than what had been previously agreed upon;
(4) The agricultural lessee failed to adopt proven farm practices as determined
under paragraph 3 of Section twenty-nine;
(5) The land or other substantial permanent improvement thereon is substantially
damaged or destroyed or has unreasonably deteriorated through the fault or negligence
of the agricultural lessee;
(6) The agricultural lessee does not pay the lease rental when it falls
due: Provided, That if the non-payment of the rental shall be due to crop failure to the
extent of seventy-five per centum as a result of a fortuitous event, the non-payment shall
not be a ground for dispossession, although the obligation to pay the rental due that
particular crop is not thereby extinguished; or
(7) The lessee employed a sub-lessee on his landholding in violation of the terms of
paragraph 2 of Section twenty-seven.

In the instant case, the Tan Heirs seek Reynaldas ejectment from the Land on the ground of nonpayment of lease rental.
The Court agrees with the Court of Appeals that for non-payment of the lease rental to be a valid
ground to dispossess the agricultural lessee of the landholding, the amount of the lease rental must first
of all be lawful. If the amount of lease rental claimed exceeds the limit allowed by law, non-payment of
lease rental cannot be a ground to dispossess the agricultural lessee of the landholding.

Section 34 of RA 3844 as amended

[29]

mandates that not x xx more than 25% of the average

normal harvest shall constitute the just and fair rental for leasehold. In this case, the Tan Heirs demanded
Reynalda to deliver 2/3 of the harvest as lease rental, which clearly exceeded the 25% maximum amount
prescribed by law. Therefore, the Tan Heirs cannot validly dispossess Reynalda of the landholding for
non-payment of rental precisely because the lease rental claimed by the Tan Heirs is unlawful.

Even assuming Reynalda agreed to deliver 2/3 of the harvest as lease rental, Reynalda is not
obliged to pay such lease rental for being unlawful. There is no legal basis to demand payment of such
unlawful lease rental. The courts will not enforce payment of a lease rental that violates the law. There
was no validly fixed lease rental demandable at the time of the harvests. Thus, Reynalda was never in
default.

Reynalda and the Tan Heirs failed to agree on a lawful lease rental. Accordingly, the DAR must
first fix the provisional lease rental payable by Reynalda to the Tan Heirs pursuant to the second
paragraph of Section 34 of RA 3844 as amended.

[30]

Until the DAR has fixed the provisional lease rental,

Reynalda cannot be in default in the payment of lease rental since such amount is not yet determined.
There can be no delay in the payment of an undetermined lease rental because it is impossible to pay an

undetermined amount. That Reynalda is not yet in default in the payment of the lease rental is a basic
reason why she cannot be lawfully ejected from the Land for non-payment of rental.

[31]

No ground for extinguishment of leasehold relation

The Court also holds that there is no ground for the extinguishment of leasehold relation in this
case.
Only in the instances stated in Sections 8 and 28 of RA 3844 as amended can leasehold relation
be terminated. These provisions read:

SEC. 8. Extinguishment of Agricultural Leasehold Relation.The agricultural leasehold

relation established under this Code shall be extinguished by:
(1)
Abandonment of the landholding without the knowledge of the
agricultural lessor;

(2)
Voluntary surrender of the landholding by the agricultural lessee,
written notice of which shall be served three months in advance; or

(3)
Absence of the persons under Section nine to succeed to the lessee,
in the event of death or permanent incapacity of the lessee.

SEC. 28. Termination of Leasehold by Agricultural Lessee During Agricultural Year.The

agricultural lessee may terminate the leasehold during the agricultural year for any of the
following causes:

(1)
Cruel, inhuman or offensive treatment of the agricultural lessee or
any member of his immediate farm household by the agricultural lessor or his
representative with the knowledge and consent of the lessor;

(2)
Non-compliance on the part of the agricultural lessor with any of the
obligations imposed upon him by the provisions of this Code or by his contract with the
agricultural lessee;

(3)
Compulsion of the agricultural lessee or any member of his
immediate farm household by the agricultural lessor to do any work or render any service
not in any way connected with farm work or even without compulsion if no compensation
is paid;

(4)
Commission of a crime by the agricultural lessor or his
representative against the agricultural lessee or any member of his immediate farm
household; or

(5)
Voluntary surrender due to circumstances more advantageous to
him and his family.

The case of Garchitorena v. Panganiban which the Tan Heirs invoked to justify the
extinguishment of leasehold relation does not appear on page 339 of Volume 8 of the Supreme Court
Reports Annotated. What is printed on such page is the case of Republic v. Perez with docket number L16112 and promulgated on 29 June 1963. For making a wrong citation, the Court admonishes Atty. Jesus
S. Anonat, counsel for the Tan Heirs, to be more careful when citing jurisprudence. The Court reminds
him of his duty not to knowingly misquote the text of a decision or authority

[32]

lest he be guilty of

misleading the Court.

WHEREFORE, the Court DENIES the petition and AFFIRMS the assailed Decision dated 31 August 2000
of the Court of Appeals in CA-G.R. SP No. 48823. The CourtREMANDS this case to the Department of
Agrarian Reform for the determination of the provisional lease rental. Costs against petitioners.

SO ORDERED.

ANTONIO T. CARPIO
Associate Justice

WE CONCUR:

HILARIO G. DAVIDE, JR.

Chief Justice
Chairman

LEONARDO A. QUISUMBING CONSUELO YNARES-SANTIAGO

Associate Justice Associate Justice

ADOLFO S. AZCUNA
Associate Justice
CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the
above Decision were reached in consultation before the case was assigned to the writer of the opinion of
the Courts Division.

HILARIO G. DAVIDE, JR.

Chief Justice

[1]

Under Rule 45 of the Rules of Court.

Penned by Associate Justice Romeo A. Brawner, with Associate Justices Quirino D. Abad Santos, Jr.
and Andres B. Reyes, Jr. concurring.
[3]
Also spelled as Romel in the Records.
[4]
Rollo, p. 8.
[5]
Ibid.
[6]
Ibid. The complaint was docketed as DCN X(07)-666.
[7]
Ibid.
[8]
Ibid.
[9]
Ibid.
[10]
Under Article 315 1(b) of the Revised Penal Code.
[11]
Rollo, pp. 8-9.
[12]
Ibid., p. 9. The case was docketed as DARAB Case No. X(07)-821.
[13]
Through Regional Adjudicator Jimmy V. Tapangan.
[14]
Rollo, pp. 70-71.
[15]
Ibid., p. 77. The decision was penned by DAR Assistant Secretary Lorenzo R. Reyes as ViceChairman, with Undersecretaries Artemio A. Adasa, Jr. and Victor Gerardo J. Bulatao, Assistant
Secretaries Augusto P. Quijano, Sergio B. Serrano, and Clifford C. Burkley as Members, concurring.
Secretary Ernesto D. Garilao as DARAB Chairman did not take part.
[16]
111 Phil. 737 (1961).
[17]
Rollo, p. 12.
[18]
Ibid., p. 13.
[19]
Ibid.
[20]
Ibid., pp. 124-125.
[21]
RA 6389 amended RA 3844 and changed this title to Code of Agrarian Reforms of the Philippines.
[22]
Mon v. Court of Appeals, G.R. No. 118292, 14 April 2004, 427 SCRA 165.
[23]
Section 4 of RA 3844 as amended by RA 6389 provides:
[2]

SEC. 4. Automatic Conversion to Agricultural Leasehold.Agricultural share tenancy throughout the

country, as herein defined, is hereby declared contrary to public policy and shall be automatically
converted to agricultural leasehold upon the effectivity of this section.
See also Mon v. Court of Appeals, supra note 22.
[24]
An Act to Govern the Relations Between Landholders and Tenants of Agricultural Lands.
[25]
Mon v. Court of Appeals, supra note 22.
[26]
Ibid.
[27]
Ibid.
[28]
Ibid.
[29]
SEC. 34. Consideration for the Lease of Riceland and Lands Devoted to Other Crops. The
consideration for the lease of riceland and lands devoted to other crops shall not be more than the
equivalent of twenty-five per centum of the average normal harvest x xx. (emphasis supplied)
[30]

The second paragraph of Section 34 of RA 3844 as amended reads:

In the absence of any agreement between the parties as to the rental, the Court of Agrarian
Relations shall summarily determine a provisional rental in pursuance of existing laws, rules and
regulations and production records available in the different field units of the department, taking
into account the extent of the development of the land at the time of the conversion into leasehold
and the participation of the lessee in the development thereof. This provisional rental shall

continue in force and effect until a fixed rental is finally determined. The court shall determine the
fixed rental within thirty days after the petition is submitted for decision.
See Mon v. Court of Appeals, supra note 22.
See Belmonte v. Marin, 76 Phil. 198 (1946), where the Court ruled that the lessee was not in default,
and thus could not be ejected for failure to pay a rental amount that exceeded what had been agreed
upon by the lessee and lessor.
[32]
Rule 10.02 of the Code of Professional Responsibility provides:
[31]

Rule 10.02. A lawyer shall not knowingly misquote or misrepresent the contents of a paper, the
language or the argument of opposing counsel, or the text of a decision or authority, or knowingly
cite as a law a provision already rendered inoperative by repeal or amendment, or assert as a
fact that which has not been proved.
See Insular Life Assurance Co., Ltd. Employees Association NATU, et al. v. Insular Life Assurance Co.,
Ltd., et al., 147 Phil. 194 (1971).